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IDX journalists in the hot seat over share allotments
A group of journalists working for national media companies are facing an allegation that they had forcefully demanded share allotments in PT Krakatau Steel initial public offerings (IPO) earlier this month in return for positive news
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group of journalists working for national media companies are facing an allegation that they had forcefully demanded share allotments in PT Krakatau Steel initial public offerings (IPO) earlier this month in return for positive news.
The Indonesian Press Council and the Alliance of Independent Journalists (AJI) are conducting
an investigation into the allegation and made a recommendation to all media companies to do the same and exercise sanctions if found guilty.
“Their modus operandi is to corner some executives with the threat of bad publicity in return for shares,” Umar Idris, secretary of AJI’s Jakarta chapter, said.
The group, allegedly journalists under the auspice of the Indonesian Stock Exchange Journalist Forum, demanded 1,500 lots of shares, which were sold at Rp 850 per share in the IPO, totaling Rp 637.5 million (US$71,000).
“They also asked for Rp 400 million for not publishing any negative stories on the Krakatau Steel IPO,” Umar said.
The negative stories are said to be the ill-motive behind the pricing of the company’s shares in the IPO.
Krakatau Steel shares were offered at Rp 850 per share and jumped 49.6 percent to Rp 1,270 within a few minutes of its listing on the Indonesian Stock Exchange.
Several groups of economists and lawmakers opposed the government’s plan to float Krakatau’s shares on the nation’s stock exchange due to suspected unfair practices in share allocation.
They said the government’s decision to fix the company’s share price at Rp 850 each during the IPO was due to pressure from politically connected businessmen.
Journalists covering the stock market are accustomed to receiving discount prices for shares from an IPO. According to a source, the alleged journalists involved in the Krakatau scandal had complained over getting lower-than-expected share allotments, thus prompting them to demand more.
Krakatau corporate secretary Wawan Hermawan told The Jakarta Post on Thursday that he had received a phone call from a journalist who had asked for “assistance” in buying the shares.
He declined to disclose the name of the journalist that contacted him or for which media organization he worked with.
“It was an informal discussion. And I thought journalists were just like any other Indonesian citizen. They have money, they want to buy shares, so I told [the journalist] to contact the underwriters,” Wawan told the Post in a telephone interview.
The underwriters were not available for comment at the time. Wawan said the journalist asked for the shares at the road-show stage of Krakatau’s IPO.
AJI Jakarta chairman Wahyu Dhyatmika said the journalists had violated the Indonesian Journalist ethical code article 7, which stipulates that Indonesian journalists are not allowed to abuse their profession and to be bribed.
“We urge the people who know more about this case to report to the Press Council and police to aid the investigation,” he said.
